How to Circumvent Three Legal Mistakes Sellers Make
After decades of hard work, selling your business can be an exciting and rewarding time. Yet, many business owners overlook the importance of focusing on the legal matters associated with sales. In this article, we’ll explore three of the most significant mistakes sellers make.
1. Use an NDA
The first critical mistake that business owners should be guarding against is skipping the use of a non-disclosure agreement. Simply stated, a business owner should always make sure that a non-disclosure agreement is in place before disclosing to any buyers that a business is on the market.
NDA’s stand as an invaluable way to restrict who does and does not know your business is for sale. After all, the last thing any business owner looking to sell his or her business wants is for competitors or employees to learn confidential information.
2. Hire an Attorney
The second critical mistake that many business owners make is they skip working with an attorney. There is no way around the fact that if you are selling a business, or for that matter anything of significant value, you need to work with a lawyer experienced in the area of sales.
Business owners become accustomed to doing a great many things themselves and learning on the job. There is no doubt that this is a personality trait that has served them well over the years. However, when it comes time to sell your business, there is zero room for “on the job training” or relying on your own instincts. One of the best ways that you as a business owner can protect your future is to work with a lawyer when selling your business. In fact, a Business Broker or M&A Advisor can be a vital resource for helping you to find a proven lawyer with a background in the buying and selling of businesses.
3. Get a Letter of Intent
A third significant mistake that business owners frequently make when selling their business is that they fail to get a letter of intent. Much like an NDA, a letter of intent is a key legal document in the process of selling a business. All too often business owners will skip requesting a letter of intent out of fear of slowing down the process and potentially disrupting a deal.
The letter of intent is designed to both clearly spell out expectations, while simultaneously protecting your interests as a business owner. When a buyer signs a letter of intent, it indicates that he or she is taking the process seriously. This will protect you from wasting your time.
The process of buying or selling a business is complex in many different ways. Whether it is dealing with human psychology, organizing your books, thinking about what information prospective buyers are likely to want to see, or addressing a wide array of legal issues, it is a complex and time-consuming process. Working closely with a Business Broker or M&A Advisor is one of the fastest ways that you can increase your chances of a successful sale.
Copyright: Business Brokerage Press, Inc.
The post How to Circumvent Three Legal Mistakes Sellers Make appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
What Can a Business Broker Do for You?
Are you thinking about selling your business? Wondering what a business broker can do to help?
If you’re thinking about selling your business, you may be tempted to go through the process alone. However, working with a business sale broker can be a great help and can make the entire process much easier overall.
If you want to learn more about how they can help you sell your business, read on. Here’s what a broker can do for you.
1. Valuate Your Business
One of the main things that a business broker can do for you is that they can evaluate your business and determine how much it’s worth.
Valuating a business is easier said than done because a lot of things go into determining its value. A broker will take all necessary factors into account including cash flow, business location, competition, and a business’ unique value proposition.
As a seller, a business broker can help you determine the highest amount that you’ll be able to get for your business and can then help you do everything you can to find a buyer who will pay that price.
2. Help Sell a Business With Confidentiality
When working with a broker, it’s important to remember that confidentiality will be taken very seriously.
When customers, employees, and competitors learn that your business is being sold, it could cause problems and lead to a reduction in profitability. A broker can work to help you sell your business but they can do it in a covert and confidential way that won’t affect its operation.
If you’re not using a broker, maintaining this confidentiality while attempting to find buyers can be much more difficult.
3. Market Your Business For Sale
One of the best things about working with a broker is that they’ll have a strong network and will know how to help market your business listing effectively.
A broker will have a strong network and will have access to a wide range of potential buyers. They can market your business sale to this network and to a variety of people who could be interested in your business.
A great broker will understand the market for your business and will know where to look to find potential buyers. They can help you to find more buyers than you would be able to find on your own and can make it more likely that you’ll find a buyer who will pay a high price.
4. Qualify Buyers
Another thing that a business broker can do is qualify buyers.
When selling a business, not just any buyer will do. Many people who show interest in buying a business aren’t serious about it or can’t get the necessary funds to complete the purchase.
Fortunately, a broker can help qualify a business buyer based on their professional experience as well as on their finances. A broker will help make sure that any buyers who show interest in your business are serious and realistic about what owning the business will entail.
A broker can help find a great buyer by ensuring that they have a true desire to buy a business, understand the ins and outs of business ownership, and are motivated.
5. Provide Expert Guidance
One of the best things that a broker brings to the table when working with a seller is years of experience and expertise. A business broker will have been through the process of helping buyers sell a business many times and have explored many strategies for finding a suitable buyer.
The experience that a broker has can be very helpful, especially since many people who sell businesses will be doing it for the very first time. By relying on this extensive knowledge and expertise of a broker, you’ll have an easier time selling your business than you would have otherwise.
6. Help Buyers Finance a Purchase
Another thing that brokers do is help buyers secure financing. A broker can help ensure that the buyer has everything they need to buy a business successfully.
This can benefit sellers as well since it will make it more likely that a buyer will be found who will be able to successfully purchase your business. It can also help a business to sell more quickly.
If seller financing is offered, the broker can help to sort out the details with the buyer and seller. Setting up seller financing and working out the specifics can be tricky, so working with a broker can be useful.
7. Help With Legal Requirements
One of the best things that a business broker can do for you is that they can help you to navigate all of the legal requirements of selling a business. They can also help you collect any necessary documents you’ll need during the sales process.
A broker can help you price your business and negotiate with buyers and structure a deal. They can also help you to take care of all the necessary paperwork and ensure that you don’t miss anything important.
Dealing with all of the legal ins and outs of turning over a business to a new owner can be complicated and can be frustrating to deal with on your own. Working with a business broker can help reduce your stress and can help you to sell your business with minimal headaches.
Making the Decision to Work With a Business Broker
If you’re thinking about selling your business, you should consider working with a business broker. They can help you sell your business effectively and will give you the best chance of getting a great price for it.
Are you ready to sell your business? Contact us today to learn more about how we can help.
Read More
Put Your Strengths First When Selling Your Business
You understand the finer points and potential of your business better than anyone; however, that doesn’t mean that prospective buyers will instantly see your business’s various strengths. When you are looking to sell your business, you have two very important jobs. The first is to get your business ready to be sold. A second essential job is to showcase your business’s greatest strengths. At the end of the day, you must be the one to articulate why your business is worth buying. This effort, of course, will be supported by your Business Broker or M&A Advisor.
Understand Who Will Buy Your Business
Most people have never sold a business before and don’t fully understand what is involved in positioning one’s business for sale. The bottom line is that not every business is a good fit for every buyer. Finding the right buyer for your business will greatly expedite the process. This is yet another reason why it is critically important to work with experienced professionals. Business Brokers and M&A Advisors not only know what buyers are looking for, but also what sellers need to do to get their business ready to sell.
How to Navigate Roadblocks
Selling a business, especially if you attempt to do so without professional help, is a very time-consuming and often draining process. Successfully running a business requires attention to detail and focus. Unfortunately, these can both suffer when owners attempt to put on yet another hat and handle the sale of their business.
While you are attempting to sell your business, it is critically important that you maintain normal operations. The last thing you want is to weaken the finances of your business while you are waiting to find a buyer. Remember that it takes months, a year, or even longer to find a buyer for the typical business. Don’t let your business suffer damage in the interim.
Think Like a Buyer
Preparing your business to be sold isn’t as simple as making a few cosmetic changes and calling it day. Instead, you’ll want to think like a buyer.
What would you want to see if you were buying a business? You would want to know a great deal about that business and how it operates, who its key employees are, how likely those key employees are to stay, who the main customers and suppliers are, and the strength of the business location and competitors. Of course, you would also want a very detailed picture of the business’s financial situation.
In short, you would want to clearly understand what the business does and what it’s really worth, how financially healthy it has been in the past, what the business’ prospects are moving forward and, in general, how much effort the business will take to operate. These are exactly the kind of key facts that any serious buyer will want to know. It’s only to be expected that a buyer would expect to learn this information before making a decision.
At the end of the day, working with a Business Broker or M&A Advisor is one of the easiest ways to streamline the sales process. Thanks to years of experience, they already understand the pitfalls that you may experience as well as what is needed to position your business so that you can find the right buyer quickly and receive the best price possible.
Copyright: Business Brokerage Press, Inc.
The post Put Your Strengths First When Selling Your Business appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
The Often-Overlooked Importance of Leases
When buying or selling a business, it is critically important that you evaluate the lease. It is a strange phenomenon that otherwise savvy business people will treat leases as a secondary concern. However, problematic terms in a lease can literally force you to pack up a business and move. This would not only be a jarring experience, but a very costly one as well.
Finding a good location is of paramount importance to both the profile and profitability of your business. You may feel that there are more important issues when buying or selling a business. But by the end of this article, you’ll see the wisdom in placing a lease near the top of your “to evaluate” list.
There are three different kinds and types of leases: a new lease, an assignment lease and the sublease. All three of these options are most definitely different from one another and can potentially impact your business in different ways.
The New Lease
A new lease, as the name indicates, is the result of a lease that has expired. That means that the buyer must work with the landlord to establish a new lease. Buying a business only to discover that you don’t have a lease and the landlord isn’t interested in keeping your business at its current location is most definitely a shock that no business owners want to encounter. Buyers should be one-hundred percent certain that they have a lease in place before they buy a business.
Assignment of Lease
The second type of lease is the assignment of lease; this form of lease is quite common. It involves the buyer of a business being granted the use of the location where the business is currently located and operating. Through the assignment of the lease, the seller is able to assign the buyer the rights associated with the lease. Of course, it is important to keep in mind that the seller is not acting as the landlord, but instead, simply has the ability to assign the lease.
The Sublease
The third option for lease is the sublease. The sublease is basically a lease within a lease, and it comes with some important distinctions that must be understood. A sublease generally requires the permission of the landlord and that permission should not be viewed as a “foregone conclusion” or “automatic.”
The bottom line is that no new business owner wants to discover that their new business doesn’t have a home. There are an array of very important issues to work out when buying a business, and it is critically important that buyers never overlook what kind of lease is involved. A savvy seller will highlight what kind of lease they have, especially if the terms are favorable. But buyers should always be proactive and ask questions about the status of the lease and make certain that lease terms are clearly defined.
Copyright: Business Brokerage Press, Inc.
The post The Often-Overlooked Importance of Leases appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
Buying/Selling a Business: The External View
There is the oft-told story about Ray Kroc, the founder of McDonalds. Before he approached the McDonald brothers at their California hamburger restaurant, he spent quite a few days sitting in his car watching the business. Only when he was convinced that the business and the concept worked, did he make an offer that the brothers could not refuse. The rest, as they say, is history.
The point, however, for both buyer and seller, is that it is important for both to sit across the proverbial street and watch the business. Buyers will get a lot of important information. For example, the buyer will learn about the customer base. How many customers does the business serve? How often? When are customers served? What is the make-up of the customer base? What are the busy days and times?
The owner, as well, can sometimes gain new insights on his or her business by taking a look at the business from the perspective of a potential seller, by taking an “across the street look.”
Both owners and potential buyers can learn about the customer service, etc., by having a family member or close friend patronize the business.
Interestingly, these methods are now being used by business owners, franchisors and others. When used by these people, they are called mystery shoppers. They are increasingly being used by franchisors to check their franchisees on customer service and other operations of the business. Potential sellers might also want to have this service performed prior to putting their business up for sale.
Copyright: Business Brokerage Press, Inc.
The post Buying/Selling a Business: The External View appeared first on Deal Studio – Automate, accelerate and elevate your deal making.
